To put it mildly: managing the cash flow of your rental property can be tricky, especially when it comes to maintaining expense payments, lease payments, and other financial transactions.
If you are still using spreadsheets and a paper and pencil based approach to maintain your financial accounts related to your small business rental property, then you are more likely to face financial bottlenecks.
In this article, we'll examine how you can avoid these bottlenecks by automating your small rental property business with accounting software based on a comparison of two popular applications, Wave and QuickBooks, for rental property management.
According to a survey by Buildium, 2017 Property Owners Perspectives, 61 percent of rental property businesses respondents view property maintenance as their top pain point (view chart below). The report also highlights financial challenges faced by the rental property business:
Property maintenance - 61 percent
Taxes and insurance - 15 percent
Setting and collecting rent - 15 percent
Pricing rents competitively - 10 percent
Accounting - 7 percent
All these financial challenges, including maintenance management, play a key role in the expense, invoice, ledger, and cash flow management of rental property. However, keeping track of these challenges as scribbling some numbers in a notebook.
Accounting software helps manage the core financial aspects of your business some of which include:
Wave and QuickBooks can help automate and streamline your small rental property business. The sections below provided a side-by-side comparison of some of the key features the software and how they stack up against your key accounting business challenges.
To find the "right" accounting solution for your rental property, you need to be clear about the business challenges that the solution will help you address by asking yourself:
What specific financial transactions do you want the accounting solution to help manage your small business rental property? Is it just rent management, expenses management, or any other finance-related transactions?
Do you want an accounting solution with overall features to manage your financial transaction or just niche features related to cash flow management, invoice management, tax management, etc.?
Are you looking for software that provides in-depth accounts reports with business intelligence dashboard and analytics?
Some of the core features of accounting solutions for rental properties include:
|Accounts management||Helps to manage accounts payable and receivable payments by recording transactions in a database of how much you third-party vendors and vice versa.|
|Invoice management||Stores, tracks, and helps to generate invoices based on predefined templates that are sent to third-party clients.|
|Cash flow management||Manage bills from vendors and pays them before the due date by scheduling recurring bill payments.|
|Accounting reports management||Helps generate and export detailed customized financial reports related to expense management, balance sheet, and accounts statements.|
|Expense management||Keeps a track of expenses that your rental property incurred through utility bills and property maintenance.|
All these features mentioned above form a core part of Wave and QuickBooks accounts management. Here's a brief lowdown on how the features compare from one tool to the other:
Wave helps you to simplify accounts payment cycle related to accounts payable and receivable.
In accounts receivable, the software is customized to help you receive rent payments from your tenants to manage the collection of rent payment from various properties, including tracking payments made by your tenants over a period and scheduling reminders for payments.
Accounts payable helps to streamline the process of giving payments to third-party vendors so that you don't miss any pending payments related to your property expenses with late fee payments.
QuickBooks helps you create customizable rent receipts so that it is easier for your tenants or third-party vendors to easily identify the total amount of payment due. The software helps you record advance rent payments, as well as late rent payments.
You can create, maintain, and send invoices to your clients through specialized invoice management. Wave keeps you updated on your invoice management by letting you send or receive invoices from your business partners through an iOS or Android mobile devices. The software automatically synchronizes all invoicing and payment information with your Wave account.
QuickBooks helps you generate customized invoices based on your brand by modifying one of QuickBooks invoice template so that you can reuse it to send invoices to multiple clients.
You can also create new invoice design from scratch by customizing the field entries of the invoice template along with your company's branding.
Wave helps you streamline payments from tenants and vendors by scheduling automatic credit card billing as compared to tracking payments through phone call and emails.
In case you don't want the automatic billing feature to manage cash flow, then you can switch between automatic and manual billing. When the automatic billing feature is turned off, invoices are directly sent to your email box and when it's on, your tenants receive the invoice along with an email receipt to you.
Quickbooks automatically tracks payment owed, along with the amount, and due date through a secured scheduling payment portal. The software also shows reports that indicated who owes you money per month.
It provides a bird's eye view of your accounts by generating detailed reports of credit and debit transactions, the budget for a month, quarter, or year, and income versus expense payments related to managing the rent and lease of your property.
All these reports can be viewed in interactive dashboard in bar or pie charts that provides an instant break-up and comparison of income versus expense or other accounting parameters.
QuickBooks for rental property highlights the key performance indicators related to your small business rental property such as profit and loss, balance sheet, income and expenses, and unpaid invoices.
The tool's dashboard provides a detailed report of all accounts related information regarding your rental property that can be customized based on the rent, lease, and expense payments. You can download accounts reports of your real estate business based on specific period such as month-on-month or yearly.
Wave provides a complete picture of the expenses that your small business real estate by providing an overview of the debit history of all the expenses related to rental property management.
The solution also provides a comparative dashboard to compare expenses with income so that you can keep a check on your business expenditure.
QuickBooks gives a drilled down approach to your accounts management to focus on expenses based on daily expenditure through it expense management tab. The tool's iOS and Android apps help you enter and manage expenses of your rental property, which can be viewed on your desktop, or mobile phone.
|Accounts management||Tracks payments made by your tenants over a period and schedules reminders for payments||Helps create customized rent receipts so that is easier for your tenants or third-party vendors to easily identify the total amount of payment due|
|Invoice management||Real-time updates invoices by sending or receiving invoices from your business partners through an iOS or Android mobile devices||Customized invoices based on your brand by modifying one of QuickBooks invoice templates that can be reused|
|Cash flow management||Streamline payments from tenants and vendors by scheduling automatic credit card billing||Automatically tracks payment owed to you, along with the amount, and due date through a secured scheduling payment portal|
|Accounting reports management||Accounting reports can be viewed in interactive dashboards in bar or pie charts that provide an instant break-up and comparison of income versus expense||Highlights the key performance indicators such as profit and loss, balance sheet, income and expenses, and unpaid invoices in reports that can be downloaded|
|Expense management||Provides a comparative dashboard to compare expenses with income to keep a check on your business expenditure||iOS and Android app helps you enter and manage expenses of your rental property|
If you are already using rental software and just want to integrate your finance management with accounting software, then QuickBooks should prove ideal as it has the highest number of integration with rental and property management software options that you can check out here.
Alternatively, if you are looking for a core accounting software that can help you automate the management of income and expense management then Wave should be an ideal choice for a comprehensive accounts management of your rental property.
Here are some handy GetApp resources that you can use to gain more information on accounting software of rental property management: